finance essay

Marketing management in the cement industry

Published: 23, March 2015

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This is the analysis of cement industries of India. In India, the growth rate of cement industry is very high. India is the IInd largest cement producer after China. It has total capacity of 151.2 million tones contributed by 125 large cement plants. Future growth in Indian cement industry is expected in coming years. It will rise upto 262.61 millions tones.

In this analysis i also include the PEST analysis of cement industry :-

P - Political issues

E - Economical issues.

S - Social issues.

T - Technological issues

In the political issues we include the Government role in the cement industry because the Government is one the biggest consumer of the cement.

In economical issues we include the role of cement industry in the economic growth in India.

In social issues we see's the role of society in the growth of the industry.

In the technological issues we talk about the technologies uses in the formation of cement.

After PEST analysis in the analysis we include the name of the Major Companies of Cement Industry. In this part there is the name of the companies that make the important role in the market of Indian cement industry.

In the next step the POTER's five force model take place. In this model we include:-

RIVALRY AMONG EXISTING PLAYERS

THREAT OF NEW ENTRANTS

THREAT OF SUBSTITUTE PRODUCTS OR SERVICES

BARGAINING POWER OF BUYER

BARGAINING POWER OF SUPPLIERS

After the analysis of industry there is the description about the ACC cement industry which is one of the major company in cement industry. In which I include following method for analysis:-

SWOT analysis

S- Strength

W- Weakness

O- Opportunity

T- Threat

BCG Matrix

Strategies

Marketing Mix

These are the following analysis which I done in the term paper for the industry. These are the very basic analysis which we have to do for knowing the strategies of any company. These methods of analysis help us lot to know about any company.

History of Cement industry in India :-

The cement industry in India gets their organized shape in early's 1990s. the Indian cement industry was established in 1914 in Porbandar with 1000 tones capacity and production of 1000 installed. In 1927, Concrete Association of India was set up to create public awareness on the utility of cement as well as to propagate cement consumption.

In the year 1956 the cement industry of India saws the price and distribution control system started fair price for customers as well as manufacturer's .In 1977 government authorized new manufacturing units to put the higher price tag for their products. In few years government introduced three tier pricing system with different pricing for cement produced in low, medium and high cost plants.

In any country the cement industry plays a major role in the growth. In India the government have the full control and supervision in cement industry. It got relief at the large extent after the economic reform. But in the pricing the government interference is still evident in India. In spite of being the second largest cement producer in the world, India falls in the list of lowest per capita consumption of cement with 125 kg. the reason behind this is the poor rural people who mostly live in the mud huts and cannot afford to have the commodity. The demand and supply of cement in India has grown up. In a fast developing economy like India, there is always large possibility of expansion of cement industry.

PEST Analysis of Indian cement industry:-

Political issues:-

Government is one of the biggest consumer in the cement industry. Government controls all the prices of the coal rates, power tariffs, railway tariffs, freight, royalty and cess on limestone. The government attracts the investors to invest in their inventories to make more profitability.

Economical issues:-

The cement industry of the India is on the boom because there is lot of house holding are under construction. The government infrastructure is also one of the major reason for the groom in the cement industry.

Social issues:-

The cement industry of India consist of 2 sectors:-

Organized sector:- it comprises of the well known cement manufacturer companies.

Unorganized sector:- In this sector all the regional and local cement producing units are

concerns. The consumers of India prefer to buy the branded cements. So for the low level cement manufacturer having the low brand value difficult to survive in front of the cement masters.

Technological issues:-

The entire process of the mining is based on the technology. The government of India take initiative to adopt the new technologies for the foreign countries. Cement industry has made tremendous strides in technological up-gradation and assimilation of latest technology.

At present most of the total capacity in the industry is based on modern and eco friendly technology.

Major Companies in Indian Cement Industry:-

ACC

Gujarat Ambuja

Ultratech cement

Grasim

India Cements

JK Group

Jaypee Group

Century

Madras Cements

Birla Corp.

Poter's Five Force Model:-

Here we discuss about porters five forces model of cement industry which tells us industry attractiveness and profit ratio of industry.

Threat of substitute: Actually there is no close substitute of cement industry. This is the major advantage of cement industry that no close substitute is available in market but there is very less approximately four or five substitute but it is also not use much and that is fly ash, slag, silica fume, rice hull ash but these cannot properly substitute the cement.

Bargaining power of suppliers: bargaining power of suppliers is very high in this industry because there is monopolistic control of external cost element for example coal power, transportation and taxes results in high bargaining power with the government.

Bargaining power of buyers: Bargaining power of buyers is limited because rising share of retail purchase and declining share of bulk purchase by government has taken away the bargaining power of customers.

Threat of new entrants: Threat of new entrant is also limited because of very huge capital investment, broad distribution of networks and government policies. Technology is required and huge number of man power is also required in cement industry.

Firm rivalry: The firm rivalry is intense in cement industry. stiff competition is present in the cement industry because large number of players are present in industry, intermittent overcapacity, marginal product differentiation the product is almost have same quality , high storage costs and low exit barrier because of high capital investment.

ACC Cement

ACC cement is the one of the largest manufacturer of cement in India. It has 16 major cement factories with modern technologies. It has the 1000 persons employed within in the India. It has 9000 dealers as who manages distribution channel within the country.

As we known the ACC is the largest manufacturer of the cement in India so it is the biggest customer of domestic coal industry, of railway and the road transportation network services for the movement of materials. It is the first Indian company to include commitment to environmental protection of its objectives. This company installed sophisticated pollution control equipment before the pollution control law was passed.

It has the large contribution in building the nation by the quality products, services, sharing expertise. It is only cement company treated as the consumer super brand in India.

SWOT analysis of ACC cement:-

Strength:-

.Good Quality

.Very good services

.Same price for all retailers and wholesalers

.Easy sales of product

.High brand image

Weakness:-

.High Promotional activities from the competitors.

.Lack of awareness programmes.

.Lot of high cost technology used.

Opportunity:-

.Rapid growth in various states.

.The Indian core industry have good future at the growing rate of 10%

.Investment from the foreign countries is going to increase.

.Various big house holding projects are on the way in India

.Demand of cement going to increase day by day.

Threats:-

.Large number of players in cement industry.

.Active competitors

.International companies are coming in India

.Heavy discount to retailers due to the increase in the competitors

BCG Matrix for ACC:-

The BCG matrix for the ACC cement:-

Stars:- The high growth products in the good growing market needs more resources.

Cash Cow:- This type of markets have low growth but high market shares.

Question marks:- this type of market have low market shares but high growth markets.

Dogs:- In this type of market both market growth rate and market share rate are low.

According to this BCG matrix the ACC cement falls in the Cash cow sector because of the leadership in the market.

Strategies adopt by the ACC:-

The ACC cement industry adopts the following strategies to gain the more market shares:-

High on quality:- The ACC cement industry focus on the high quality of the product. This strategy helps the company to maintain and make new customers.

This company also take care of their customers. This strategy also make difference from other competitors.

Branding:- As we know this company have the good brand image in the market.

This strategy helps company to attract more and more customers in India because in India the people have more attraction on the brand products.

Advertisement:- The advertisement helps any company in growing. From the advertisement the people comes to know about the product.

This company also concentrate on the advertisement that makes their products more effective.

Other promotional activities:- The Acc also concentrate on the other promotional activities like companying, and many more activities which helps industry to grow more.

Packages:- Acc gives high packages to their dealers or distributors. This strategy helps in making more and more distributors of the product.

CONCLUSION

Keeping pace with changing times and an ever-growing need for specialized services, ACC has begun offering its marketing expertise and distributaries facilities to other producers in cement and related areas. However a precondition of all such agreement is quality control supervision to be carried out by an ACC expert located at the franchisee's plant. Each of the regional Marketing offices has a customer services cell that is manned by qualified civil engineers. These, in addition to handling after-sales servicing, function as advisory bodies that can help customers, make the right choice of cement for a specific area of application.

ACC can provide expert advice on getting the best value from cement and offer assistance on related issues in civil construction projects.

Besides this, technical books/booklets on cement, concrete and building construction and maintenance are regularly must be available for the benefit of the customers. In addition to this, ACC also publish free booklet, which profiles the latest information on concrete research, design, construction and maintenance.

Thus to conclude it can be said that acc cement has its branches spread all over India

ACC Limited company product are the profitable not only in India but also in the whole world.

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